Judge Upholds $3.3 Million Judgment In Favor of Fox Insurance Company Against Former Pharmacy Benefit Manager

NEW YORK, May 22, 2012 /PRNewswire/ -- Fox Insurance Company, a Medicare Part D provider with offices in New York, NY, announces the confirmation of a judgment in the arbitration between the company and ProCare, its former pharmacy benefit manager, in excess of $3.3 million, following a suit against ProCare based on Fox's allegations of negligence and breach of contract. On May 21, 2012, the U.S. District Court for the Northern District of Georgia, Atlanta Division, issued its decision confirming the arbitration award after its May 7th rejection of ProCare's request to vacate the award.

Nathan M. Barotz, chairman of Fox Insurance Company commented: "Fox Insurance is gratified that the judgment in the arbitration was upheld. Fox stands by its assertion that it was ProCare's failure to carry out its duties under its contract with Fox, and not any failure of Fox Insurance Company, that resulted in the improper denial of enrollee claims."

United States District Court Judge Thomas W. Thrash ruled that the arbitration panel acted within the scope of its authority in issuing the November 22, 2011 award, and that ProCare is bound by that decision. The arbitration award includes a finding that ProCare breached the Client Services Agreement (CSA) between the companies. ProCare was cited as failing to have software to carry out Fox's instructions (as well as Centers for Medicare & Medicaid Services (CMS) requirements) regarding prior authorization and high cost edits, and incorrectly informing Fox that it had fixed the problems with its software.

Fox had presented evidence that ProCare's claims processing system returned thousands of drug claims to pharmacies with the message that prior authorization was required, when no such requirement was in place – including on certain "protected class" medications that would never have such a designation. This caused the rejection of thousands of claims.

Fox also demonstrated that it had repeatedly asked ProCare to upgrade its software in order to satisfy CMS requirements and instructions regarding prior authorization and protected class drugs. While ProCare had informed Fox that these upgrades had occurred, they had, in fact, not, which may have threatened Fox's standing with CMS.

These claim denials drove CMS to take action against Fox in 2010, which resulted in the termination of its contract as a Medicare Part D provider. Fox maintained that these denied claims, which were the impetus behind CMS's actions, were caused by ProCare's negligence and not any direct actions by Fox itself. This assertion was the focal point of the arbitration between Fox and ProCare, with the award resulting in findings that ProCare breached the CSA, improperly withheld rebates owed to Fox, and must collect and turn over to Fox sums identified in a Fraud, Waste and Abuse (FWA) audit of the pharmacies in ProCare's pharmacy network.

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